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Consumers’ Views of Digital Insurance Distribution Strategies

Digital distribution is a hot topic for insurers. The advent of new digital options, combined with new potential competitors, has increased the volume of discussion. In our experience, much of this is internally focused, with consumer preferences represented by personal preferences of insurer staff.

We recently came across a white paper which focused on consumers’ views of various distribution methods. Although the research is focused on the UK, we think it offers insights, as well as some counter-intuitive surprises, which raise new questions. We’d be interested in your take on the results.

Targeting the consumers…

The white paper, Distribution Strategies in Insurance,  was published by Target, which provides software and services to insurers and financial services organizations in the UK, Australia, and New Zealand.  The white paper used data from a commissioned survey, which collected data from 2,000+ working age adults in the UK, as well as a review of other studies.

What are keys factors for consumers?

The survey confirmed the obvious about consumers’ expectations:  the most often ranked factor in considering an insurer, a product, or a renewal was price (80%).

Second and third factors mentioned were product features (60%) and brand (42%).  The next two elements, almost as important as brand, were convenience (ease in obtaining a quote) – 36% and ability to speak to someone easily – 31%.

Clearly, consumers want the interactions and communications to be easy.

Interaction and communication preferences are not settled….

And consumers want to use their preferred communications channel.

Email is the preferred method of communication for the largest consumer segment (36%).  The telephone is just behind (33%).  Accessing insurers’ sites comes next, but significantly lower (13%).  Instant messaging and face-to-face are tied (5% each).

These data align with information Gartner’s Kimberly Harris-Ferrante presented at the 2015 Insurance-Canada.ca Technology Conference.  We are clearly living in a mixed environment and will be for some time to come.

On top of the technology is …. confusion?

Regardless, many insurers are feeling pressure to do something.  There is definite progress in rolling out functionality. The Target study cites a KPMG survey which found that 69% of insurers had a digital strategy that went beyond a website.

But what is the result?

The Target survey found that 36% of the respondents agreed or agreed strongly that researching information on the insurers’ websites was “very confusing”.  The research also revealed a “correlation between consumers’ preferences for digital channels and their disappointment with the offerings the insurers put forward.”

Significantly, the 35-44 year olds, who presented as the most tech savvy demographic (measured by comfort with multiple devices), were most likely to find the insurers’ on-line offerings confusing.

What’s the problems here? And can we buy  solutions?

In our mind, the most salient factor is the lack of a business driven strategy.  Only 37% said that their digital strategy was aligned to their company’s strategic direction.

The Target survey found that a number of insurers are looking to be fast followers.  One method is to buy expertise.  Target found that 59% of executives surveyed expect to see their competitors buying digital start ups.

Problem solved?

The authors of the Target study don’t think so:

“There are no shortcuts… Insurers need to address their digital offerings now, and also look at where their legacy systems and cultures are creating barriers to success, and where their efforts to date are falling short.”

We agree.  Target sites two organizations which it believes are facing up to the  real challenges:  RSA and Aviva.

We contacted Aviva Canada and a spokesperson pointed us to its 2014 Annual Report:

“We put Digital First because our customers are increasingly choosing this as their preferred way to deal with us. Through digital we can support customers more quickly with their enquiries and transactions, wherever they are in the world .”

This is Digital First, not Digital Only.  The focus is providing clarity in communication.  “Our aim is to offer customers one view of Aviva – one statement, one premium, one phone number, and one log-in,” the spokesperson noted.

Business before technology.  We like that

What do you think?

Do you think that the UK data tracks to our environment here?  Are we in a mixed environment now?

Are you seeing some digital approaches that are working well?  Or not so well?

Take aim at the Target and leave your thoughts here.

 

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